Category Archives: Tenants Policy

On a regular basis, our agency receives calls from our clients who are opening a business and are in the middle of lease negotiations with a landlord. Whether your business is an office, a store, or a showroom, a lease agreement typically obligates a tenant to carry specific limits of insurance. Often the landlord wants to be named on your policy and requests proof of this prior to the tenant taking possession of the space. This proof is called a Certificate of Insurance and it typically requires updating on an annual basis.

Sometimes, we find that the landlord’s insurance requirements are so outrageous it is as if they want to transfer the entire insurance obligation to the tenant and cancel their own policies! What most would-be tenants do not realize is that the terms of a lease and the limits of insurance required by management are usually negotiable and a knowledgeable insurance professional can be of great assistance during this time. In addition, the landlord’s interests are never fully protected by a tenant’s policy and a savvy landlord will always maintain their own policy to protect their own interests.

Most leases minimally request that the tenant carry General Liability limits of $1 million per occurrence and $2 million in the aggregate. Often there may be an additional request for a $1 million (Excess) Umbrella policy. They might also require Workers’ Compensation, Automobile Liability and, depending upon the nature of the business, Professional Liability. These requirements, we feel, are not unreasonable demands. Some leases might require coverage for Improvements and Betterments made to the space by the tenant as well as the continuation of Rent Payments even if the space becomes uninhabitable in the event of a claim. We strongly suggest that you have someone who is really well-versed in contract language, such as your attorney, review the lease clauses prior to signing such a document.

Once your policies are bound, your agent or broker issues you, the insured, a certificate naming your landlord as the Certificate Holder. It is very important to understand that the certificate of insurance is only a snapshot of the coverage you just put in place.

A Certificate cannot add to the coverage, change the coverage or modify it in any way. The issuer (your agent) cannot provide any wording other than that which is contained in the policy document. In addition your agent cannot provide any assurance of payment for a loss because liability is based upon negligence (fault) which is something to be investigated by the insurance carrier.

In fact, the subject of “Certificates of Insurance” is such a hot topic that many agents and brokers take innumerable courses to become more knowledgeable as to the proper procedure to follow when issuing a certificate, so they can answer a variety of questions such as those we hear on a daily basis:• Why all this emphasis on who, what, where, how and when to get a certificate?
• Who should you provide with a certificate? What should it say?
• How do you know what really should be included?
• When can you push back on a landlord asking for unreasonable inclusions?
• Why do landlords request the name of every officer, director, member, agent, representative, successor, and assign appear on a certificate of insurance these days?

The main answer to all these questions is that we live in a very litigious society in very challenging economic times and everyone is looking to have their interests protected. Moreover, everyone is looking to have their interests protected by someone else so that they don’t have to pay any additional monies on their own insurance policies. Most important, when a loss occurs depending upon who is named on a certificate and to what degree they are included, they are often entitled to a defense should a suit be brought against them. Therefore, it is up to an insured to become educated and be sure that their limits of liability aren’t in any way being diluted by the inclusion of numerous others. After all, your insurance is there primarily to protect you and should be available to make payment in case a judgment is ultimately rendered against you.

So, before you agree to give away your “store,” we suggest that you make a call to your agent. Ask them to look over your lease, the requested limits of insurance, as well as any request for additional insured status to see if everything being requested is both reasonable and in order. After all, insurance agents pride themselves on being able to offer their clients a “decent night’s sleep”.

Dear Sherri,My mom owns a two-family house. She lives on the first floor and I live on the second floor. If there were a fire or if there were a theft in my apartment, would my belongings be covered under my mom’s homeowner’s insurance policy?

Thanks, Donna

Hi Donna,

This is such a great question because due to the economy, so many young people are going back to live either with their parents or in property that their parents own. If you are living in the same unit with your parents, the answer would be yes, your belongings are covered by your parents’ policy since the definition of an insured is as follows: “You (the person named on the policy), Your Spouse (must be a resident at the same household) Resident Relatives and any other person under the age of 21 who is under the custody of the person named on the policy.” But don’t get too excited. In your case, the answer is no, you will NOT be covered under your mom’s policy as you are not living in the same unit or household. Living in the same building does not qualify you for free insurance. Therefore, you need to purchase a Renter’s Policy whether you are paying rent or not (if you are not paying rent, I am going to be so jealous that I might have to slap you!). A Renter’s Policy will protect your personal contents in your apartment and your personal liability. Always check with your agent to be sure your policy is providing you with the coverage you need.

Since I rent an apartment, would my landlord’s policy cover any fire damage to my personal possessions?

No. Your landlord’s policy covers the actual building itself; the walls, roof, wiring, plumbing, etc. It does not cover your personal possessions such as your clothing, furniture, or electronic equipment. To obtain coverage for your own items, you need to purchase a Renter’s Policy. Also, your landlord’s policy doesn’t cover you for loss of use while your apartment undergoes renovations after a fire. However, a Renter’s Policy would reimburse you for any extra expenses you incur should you require temporary lodging.

With the holidays upon us and all those jewelry advertisements shouting at us day and night, I can’t help thinking about insuring all those new baubles, bangles and beads that will be found under our Chanukah lights and/or in our Christmas stockings this year.

I remember when my daughter became engaged. She, having no interest in jewelry and knowing nothing about diamonds, described it to me as one big circular stone with two smaller circular stones on each side. I, in turn, immediately thought about insurance. When I broached the subject with my son-in-law to be, he assured me that their tenant’s policy would take care of it should anything happen. Well, that actually might be true if the ring was a zircon rather than a diamond (and a beauty at that). While it is true that the typical homeowners/tenants policy does provide coverage for many types of jewelry loss, including theft, the coverage is very limited. As for theft coverage, often there is a cap per item or a blanket limit for all jewelry which is insufficient to cover such an expensive item. Statistics indicate that theft of a diamond ring is more apt to occur than a fire.

Other items, best insured individually, include furs, watches, and collections of various kinds to name just a few. Such items are usually scheduled on a “Floater Policy” with worldwide coverage, for a specifically stated amount determined by an appraisal.

If you are lucky enough to get engaged during this holiday season, congratulations! If not, and you just get a very expensive present, check to make sure that the item is insured for its full value.

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Do you have an insurance question? If so, e-mail it here and our insurance professional Sherri will give you the scoop on all you need to know. Your question might also appear in our Ask Sherri video series!

Ask Sherri
Do you have an insurance question? If so, e-mail it here and our insurance professional Sherri will give you the scoop on all you need to know. Your question might also appear in our Ask Sherri video series!

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